Finance Accounting Cheat Sheet

📘 Financial Accounting Formulas & Tables – Study Guide Compiled by Rickie




1. Accounting Basics & Formulas

Accounting Equation

Assets = Liabilities + Owner’s Equity


Example 1: Owner invests $20,000 cash - Debit Cash $20,000 - Credit Owner’s Equity $20,000


Example 2: Equipment $6,000 purchased on credit - Debit Equipment $6,000 - Credit Accounts Payable
$6,000


Diagram Placeholder: Accounting Equation Flowchart


Double-Entry Rules

• Every transaction affects 2+ accounts
• Debits = Credits

Journal Entries Table: | Date | Account | Debit ($) | Credit ($) | |------|--------|-----------|------------| |
01/01/2025 | Cash | 20,000 | - | | 01/01/2025 | Owner’s Equity | - | 20,000 | | 02/01/2025 | Equipment
| 6,000 | - | | 02/01/2025 | Accounts Payable | - | 6,000 |


Key Accounting Ratios

Ratio Type Formula Explanation

Current Ratio Current Assets ÷ Current Liabilities Short-term liquidity

Quick Ratio (Current Assets – Inventory) ÷ Current Liabilities Immediate liquidity

Debt-to-Equity Total Liabilities ÷ Owner’s Equity Financial leverage

Gross Profit Margin (Revenue – COGS) ÷ Revenue Profitability

Net Profit Margin Net Income ÷ Revenue Net efficiency

Return on Assets (ROA) Net Income ÷ Total Assets Asset utilization

Return on Equity (ROE) Net Income ÷ Owner’s Equity Shareholder return


Depreciation Formulas

Straight-Line: (Cost – Residual Value) ÷ Useful Life Example: Equipment $5,000, residual $500, life 5 years
→ Depreciation = $900/year


Reducing Balance: Book Value × Rate Year 1: $5,000 × 20% = $1,000 Year 2: ($5,000 – $1,000) × 20% =
$800




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